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$185m tech fund launched in London to prevent UK 'brain drain' to US

British technology start-ups attracted a record amount of investment last year - Bloomberg
British technology start-ups attracted a record amount of investment last year - Bloomberg

London-based venture firm Blossom Capital has launched a new $185m (£142m) fund in a move it said would help stop the flow of European entrepreneurs relocating to the US.

Blossom, which has backed companies including payments firm Checkout.com, said the latest cash would allow it to "tap into Europe’s unrivalled opportunity" in areas such as fintech.

It said historically European founders had been forced to shift to the US to grow their businesses, given the support for start-ups available in the country, but the fact that "early-stage US funds lacked the local expertise and network to help founders hire and scale on the ground in Europe".

Such moves are thought to have compounded the so-called "brain drain" from the UK to the US which has seen some of the best technology and science talent move to America.

Figures compiled by The Daily Telegraph in 2018 suggested around a third of Britain's leading machine learning and AI specialists who had left UK universities had gone on to take roles at Silicon Valley-based tech firms. Others had taken up posts at North American universities.

However, Blossom founder and partner Ophelia Brown said founders were starting to ask "why on earth would I move to the Valley, when I have incredible networks here which I can build and find very talented individuals across engineering, design and other skill-sets".

Blossom said its new $185m early-stage fund would allow more European-founded start-ups to establish their companies here, and said it could then connect them to US growth investors further down the line.

Duffel – one of Blossom's early-stage investments – for example last year received investment from US firm Benchmark. The start-up develops travel booking software and was part of the Y Combinator Silicon Valley start-up programme.

In the past, Ms Brown said, companies would have stayed in the US after the Y Combinator scheme, but "now they are coming back".

Interest in UK tech has been on the rise in recent years, with figures released last week showing more than £10bn was funneled into British start-ups in 2019, a record amount.

According to the report, compiled by government-backed Tech Nation and Dealroom, the UK ranks third in the world for investment, well ahead of any other European country.